10-K · August 13, 2026
Applied delivered strong fiscal 2026 results, with revenue up 8.8%, operating margin expanding to 11.1% and diluted EPS increasing 8.2% to $10.95. Engineered Solutions and acquisition contribution drove growth, while…
Earnings analysis · 10-Q
AIT earnings analysis
Filed October 27, 2026 · Our reading of the company's report
The latest report
Applied delivered a solid year-over-year quarter, with revenue up 7.6% to $1.291 billion, operating margin expanding to 11.1%, and diluted EPS rising 12.9% to $2.97. Engineered Solutions drove the performance, while…
Read full summary
Applied delivered a solid year-over-year quarter, with revenue up 7.6% to $1.291 billion, operating margin expanding to 11.1%, and diluted EPS rising 12.9% to $2.97. Engineered Solutions drove the performance, while Service Center growth was more modest and its operating margin contracted. The principal offsets were weaker operating cash flow, higher debt and interest expense, increased LIFO costs, and modest deterioration in receivables metrics. The 10-Q did not provide new quantitative guidance, although management stated that liquidity remains sufficient for planned operating, investment, acquisition, debt-service, dividend, and repurchase needs.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $2.97
What stood out
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Operating leverage improved
Revenue increased 7.6% year over year to $1.291 billion, while operating income rose 11.3% to $143.592 million. Operating margin expanded to 11.1% from 10.8%.
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EPS growth outpaced net income
Diluted EPS increased 12.9% year over year to $2.97 from $2.63, supported by net income growth of 9.5% to $110.403 million and a lower diluted share count of 37.180 million versus 38.271 million.
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Engineered Solutions led growth
Engineered Solutions was the primary growth driver, with revenue up 14.1% to $475.821 million and segment operating income up $15.1 million to $60.923 million. Segment operating margin increased to 12.8% from 11.0%.
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Margin expanded despite LIFO drag
Gross margin improved to 30.4% from 30.1% despite LIFO expense rising to $5.631 million from $2.622 million. Management cited approximately 0.4% of benefit from price contributions and channel execution and approximately 0.1% from favorable mix.
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Liquidity remains solid
Working capital increased to $1.015 billion from $966.3 million, and the current ratio improved to 2.9 from 2.6. Revolver borrowing capacity remained substantial at $805.8 million at September 30, 2026.
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Aggressive share repurchases
The company repurchased 245,285 shares for $80.034 million during the quarter, at an average price of $326.29 per share, while diluted shares declined to 37.180 million from 38.271 million year over year.
What to watch
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Cash conversion weakened
Operating cash flow declined to $86.376 million from $119.317 million year over year, primarily due to a $44.9 million working-capital outflow. Free cash flow is not reported, while capital expenditures increased to $13.013 million from $7.301 million.
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Debt and interest costs increased
Total debt increased to $282.300 million from $262.300 million at June 30, 2026, and net interest expense rose to $3.087 million from $0.993 million. The revolving credit facility rate was 4.70% at September 30, 2026 versus 4.44% at June 30, 2026.
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Cost inflation pressures margins
LIFO expense increased to $5.631 million from $2.622 million, creating an approximately 0.2% gross-margin headwind. Management also reported higher compensation costs of $12.3 million year over year.
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Receivables risk increased
Receivables quality indicators deteriorated modestly: DSO increased to 57.3 from 55.3 at June 30, 2026, while receivables more than 90 days past due increased to 1.4% from 1.1%. The provision for receivable losses was $0.999 million versus a $1.671 million recovery in the prior-year quarter.
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Service Center margin contracted
Service Center operating margin declined to 12.9% from 13.3%, with segment SD&A rising to 16.3% of sales from 15.6%. Management cited higher employee-related costs and $1.8 million of higher accounts-receivable provisioning expense.
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Variable-rate and receivables exposure
The company remains exposed to variable-rate financing: the AR securitization facility rate increased to 4.80% from 4.55%, and borrowing capacity is subject to customer credit ratings, concentration levels, and receivables characteristics.
Management's outlook
The 10-Q does not provide new quantitative revenue or EPS guidance. Management expects existing cash, cash equivalents, available revolver capacity, and operating cash flow to fund normal working capital, dividends, acquisitions, capital investments, debt service, and share repurchases.
Earlier filings 4
10-Q · April 28, 2026
Applied reported Q3 net sales of $1,251,453,000 (up $84,704,000 or 7.3% YoY) and diluted EPS of $2.65, modestly above consensus. Organic sales excluding acquisitions and FX rose $69,700,000 or 6.0%, led by Engineered…
10-Q · October 28, 2025
Applied Industrial Technologies (AIT) reported a strong Q1 2026, exceeding both earnings and revenue expectations. Revenue grew to $1.2B, marking a 7.5% increase from the previous quarter, while EPS rose to $2.63, a…
10-K · August 15, 2025
Applied Industrial Technologies positions itself as a leading technical distributor of motion, power, control and automation products with a dual-segment strategy: Service Center (66% of fiscal 2025 sales) for MRO/local…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.